Corrections Corp. of America is at a multi-year high, and
traders are bracing for a pullback in the prison operator.
optionMONSTER's Depth Charge tracking program detected the purchase
of more than 3,300 November 32 puts for $0.30 and $0.35. The volume
is more than 150 times higher than the open interest of just 22
contracts at the beginning of the day, indicating that new
positions were initiated.
The investor now has the right to sell CXW for $32 on expiration
two weeks from now, no matter how far they drop. He or she may be a
shareholder looking to hedge a long position, or they could be
speculating on a drop, looking to profit from the inverse leverage
generated by the puts.
CXW is down 1 percent to $34.82 this afternoon but is up more than
70 percent so far this year. Earlier in the session, shares of the
prison operator touched $35.50, a level not seen since late 1999.
Today's put buying comes with the company scheduled to release
quarterly results next Thursday. The last report in August beat
expectations on the top and bottom lines.
Overall option volume in the name is quadruple the daily average.
Puts outnumber calls by 60 to 1, a reflection of the session's
bearish sentiment.
